In the mid-1940s, the railroad purchased three second-hand, heavy "Consolidation"-type freight steam locomotives. Once placed into service, they became the main freight power of this unique New Jersey shortline throughout the 1940s and early 1950s. The three sisters quickly became well-known representatives of the prosperous Morristown & Erie... an image of industrial power that remains today.

The M&E entered the diesel era on April 28, 1952 when its steam engines were replaced with a brand-new new diesel, S4-model No. 14, that had been manufactured by the American Locomotive Company (ALCO). The last steamers, Nos. 10, 11 and 12, were stored in the enginehouse at Morristown where they sadly gathered dust until they were finally scrapped in October 1955.

A second ALCO diesel, RS1-model No. 15 built in 1944, was acquired from the U.S. Navy in 1963 to assist No. 14 with the freight business.

Regrettably, the Railroad's fortunes changed drastically when the management of the mid-1970s caused the company to fall into bankruptcy by diverting freight earnings into unsuccessful, non-transportation business ventures.

Through the efforts of a Court-appointed Trustee, the Morristown & Erie Railroad continued to operate on an as-needed basis while in receivership. Compounding the railroad's misfortunes was the bankruptcy and shutdown of Whippany Paper Board. Over a period of three years, all three paper mills (Hanover Mill, Stony Brook Mill, and the giant Eden Mill complex) closed down, and freight carloadings on the M&E seemed to evaporate overnight. By 1980 the M&E was down to hauling a paltry sum of cars per week... a far cry from the thousands of cars it had once hauled each year.

The M&E was very fortunate when a business partnership, led by the late Benjamin J. Friedland began negotiating to buy the railroad in 1980. On January 1, 1982, the company was reorganized and appeared as the Morristown & Erie Railway, Inc.

With Friedland now providing the leadership, four additional locomotives were acquired, and the roadbed received its first maintenance in nearly a decade. Through Ben's tireless efforts the Morristown & Erie currently operates over three separate routes in Morris County, in addition to its original main line (now known as the 'Whippany Line').

Since 1965 the Whippany Railway Museum is dedicated to Preserving the Heritage and History of the Railroads of New Jersey through the Restoration, Preservation, Interpretation and Operation of Historic Railroad Equipment and Artifacts from New Jersey and the immediate vicinity